Deck 15: Current Trends in Strategic Management

Question 1

Complementarity research should not be used by a company as an excuse for not adopting a best practice such as a "six-sigma" quality management systems "lean production" manufacturing processes, or a "360-degree" employee appraisal system.

Answer 1

False

Question 2

For shareholder value maximization to be a helpful goal for top management it needs to focus not on stock market value but on the fundamental drivers of value.

Answer 2

True

Question 3

In a more complex business environment where companies must pursue multiple dimensions of competitive advantage is consistent with Jim Collins' recommendation that companies should seek to be "hedgehogs" rather than "foxes." (Drawing upon the categorization of intellectuals made by Isaiah Berlin.)

Answer 3

False

Question 4

According to the economist Brian Arthur, the main impact of digital technologies will be the emergence of "external intelligence": intelligence and decision making that existing machines rather than in humans.

Question 5

The growth of the freelance economy, in which taxi services, short-term accommodation, and home maintenance is provided by self-employed individuals rather than by firms, has little to do with technology, its mainly due to the preferences of individuals for the flexibility of self-employment over the rigidities of a full-time employment.

Question 6

The increasing number of companies delisting from US stock exchanges to become private companies is a response to the increasingly onerous legal responsibilities of public companies and the increasing scrutiny to which they are subject.
public corporations.

Question 7

The three major societal issues that companies are being forced to address are: fairness, ethics, and sustainability

Question 8

Among industries based upon digital technologies, the presence of network externalities is critical in determining whether the industry tends towards monopoly or fragmentation.

Question 9

Applying real options thinking to industry analysis implies that industry attractiveness is less about an industry's profit potential and is more concerned with the range of strategic opportunities that an industry offers.

Question 10

"Managing real options" means that firms should take a greater interest in how share option packages are managed, to achieve the best value for shareholders

Question 11

Of the 109 Chinese companies that were members of the Fortune Global 500 in 2018, few were state-owned enterprises.

Question 12

The financial crisis of 2008-9, a series of corporate scandals, and increasing inequality have undermined the legitimacy of market capitalism.

Question 13

The complementarity of management practices implies that the effectiveness of a particular management practice depends upon how it fits with all the other management practices of the company.

Question 14

The current business environment is unusually perplexing and unpredictable because many of the trends of the late 20^th century-internationalism, the spread of constitutional democracy, and faith in market capitalism-have now gone into reverse.

Question 15

The growing interconnectedness of the world economy and human society cannot be regarded as a contributing factor to the increasing volatility and unpredictability of global environment of business.

Question 16

Rising concentration and growing monopoly power in the 21^st century is a feature of mature industries such as beverages, chemicals, and mining.In technology-based sectors, the disruptive effects of digital technologies ensure robust, dynamic competition.

Question 17

Companies such as Toyota, Wal-Mart, 3M, and Samsung have sustained strong performance over long periods of time by basing their competitive advantage on a single core competence.

Question 18

The forces reshaping business during the first two decades of the 21st century bear no resemblance to those which reshaped business during the first two decades of the 20th century.

Question 19

Increasing levels of interconnectedness within a complex, nonlinear systems help to stabilize the impact of potentially disruptive forces.

Question 20

The emergence of a multipolar world where the US no longer exercises a dominant role has meant that the "G7" leading economies now collaborate address the world's most pressing economic and environmental problems.

Question 21

According to systems theory, high levels of interconnectedness can lead to:

A)More pressure on governments to regulate the economy and increase their interventionism
B)A spiral of economic catastrophes and business failures
C)Greater stability in the whole system
D)A tendency for small initial disturbances to become amplified in unpredictable ways

Question 22

If companies are to put in place the capabilities needed to build multiple layers of competitive advantage, their organizational structures need to become more complex.

Question 23

If competition, market turbulence, and accelerating technological change are increasing the pace at which firms' competitive advantage is eroded, to sustain competitive advantage companies need to:

A)Create multiple sources of competitive advantage
B)Build strength in intellectual property
C)Foster innovation
D)Adopt global strategies that arbitrage the resource advantages of multiple countries.

Question 24

The first 16 years of the 21st century have been characterized by unprecedented turbulence in the global economy, politics, and society.This turbulence is likely to continue into the future because:

A)Declining legitimacy of political leaders in many countries and growing ineffectiveness of international institutions
B)A growing ineffectiveness of international institutions and a decline in US global influence
C)Increased global interconnectedness causes disturbances to be amplified while the declining global influence of the US implies a lack leadership in managing these disturbances
D)The global financial system remains fragile

Question 25

The principal impact of digital technology on business during the next decade is likely to be:

A)Increasing importance of software and declining importance of hardware
B)Accelerated growth of the "sharing economy"
C)China displacing the US as world leader in digital technology
D)External intelligence: business decisions and the management of transactions undertaken by machines

Question 26

Applications of complexity thinking to management suggest that top management should set rules governing the interaction of organizational members and their expected behaviour, and relinquish direct supervisory control

Question 27

Real options theory may change strategic management by:

A)Requiring top management to become familiar with the fundamental of options theory
B)Reframing the tools of industry analysis and the analysis of resources and capabilities to take account not just of the potential for profitability, but also the implications for strategic options
C)Both (a) and (b)
D)Neither (a) nor (b)

Question 28

Complexity theory predicts that complex, adaptive systems rarely have the capacity to self-organize-to avoid chaos hierarchical control is essential.

Question 29

The main impact of digital technology on the competitive structure of industries during the 21^st century has been:

A)Lower entry barriers
B)Increased fragmentation of established industries
C)The rise of large, market dominating digital giants
D)"Business ecosystems" displacing "industries" as the relevant arenas in which competition occurs

Question 30

The most effective remedy for the problems that have arisen from top managements' pursuit of shareholder value is likely to be:

A)Increased government regulation
B)Recognition that management should focus not on stock market capitalization but upon the underlying drivers of long run profitability
C)Companies explicit commitment to the goal creating stakeholder value
D)Increased shareholder activism.

Question 31

In 2016, the ratio of US CEO compensation to that of US production workers averaged about:

A)420
B)260
C)150
D)80

Question 32

An implication of complexity theory for the leadership of business enterprises is:

A)CEOs should relinquish rigid control and foster significant degrees of autonomy among more junior managers
B)CEOs should rely more on strategic planning and less on financial control
C)Organizations in the future will not need a CEO, they can rely on the self-organizing capacity of complex, adaptive systems
D)Organisational hierarchies will become obsolete

Question 33

The first two decades of the 20^th and 21^st centuries were similar in terms of factors that were reshaping the business environment.The most significant of these common factors were:

A)Political turbulence: in the early 20^th century the collapse of the Austro-Hungarian and Ottoman empires, in the 21^st century the ethnic and religious strife and the rise of populism
B)Technology: in the 20^th century electricity, the telephone and the automobile; in the 21^st century the internet and mobile communication
C)Popular disaffection with big business: in the 20^th century opposition to the concentration of economic power in monopolies and trusts, in the 21^st the inequality associated with the capitalist economy
D)Corporate social responsibility: in the 20^th century outrange against unsafe and unhealthy products and worker exploitation; in the 20^th century concerns over environmental irresponsibility and exploitation of third world workers.

Question 34

Research into leadership generally supports the view that complex organizations facing uncertain environments require leaders that are decisive decision makers rather than humble; empathetic individuals endowed with social and emotional intelligence.

Question 35

A major implication of corporate scandals, inequality, and environmental sustainability implies that company executives need for firm strategy to pay greater attention to:

A)Risk management
B)Business ethics
C)Social legitimacy
D)Achieving greater diversity among boards of directors.

Question 36

The declining public support for market capitalism during the 21^st century is the result of:

A)The rise of populism and nationalism
B)Distaste for the greed that was the root cause of the 2008-9 financial crisis
C)Corporate scandals, the financial crisis, and rising inequality Production costs to fall
D)The markets for once-separate products to converge.

Question 37

To successfully transition from mass manufacturing to lean manufacturing, a company should:

A)Upgrade its information technology
B)Adapt its human resource management practices
C)Reduce the number of its suppliers
D)Hire external consultants

Question 38

Among industries based upon digital technologies, a key factor that determines the industry's structure and sources of its competitive advantage are whether:

A)It is subject to network externalities
B)It supplies hardware or software
C)The firms within it deploy the same business model or different business models
D)The scope of competition is national or global

Question 39

As strategy becomes increasingly viewed as the management of a portfolio of options, the emphasis of strategy formulation shifts:

A)From strategic planning to business model innovation
B)From growth through acquisition to growth through creating a network of strategic alliances
C)From shareholder value maximization to stakeholder value maximizations
D)From making resource commitments to the creation of opportunities

Question 40

Achieving social legitimacy requires that businesses should:

A)Seek permission from the local community to operate
B)Adapt to societal pressures
C)Follow accepted ethical codes
D)Replace shareholder value maximization by stakeholder value maximization.

Question 41

To develop and deploy the broad range of capabilities that a company needs to possess to preserve its competitive advantage in competitive, rapidly changing markets, companies need to:

A)Combine both incremental and radical change initiatives
B)Appoint corporate leaders with well-developed emotional intelligence
C)Establish permeable corporate boundaries that allows flexible collaboration with a range of external partners
D)An optimal level of adaptive tension.

Question 42

If organizations are to become increasingly self-managed rather than controlled through top-down commands, they need to develop:

A)Advanced artificial intelligence systems
B)A strong organizational culture
C)A sense of identity, free-flowing information, and well-established internal relationships
D)Organizational members who are well trained and possess a sense of empowerment

Question 43

Organizational identity refers to:

A)A collective understanding among employees of what is core, enduring, and distinctive about the character of an organization
B)The set of an organization's recipes for successfully competing in the marketplace
C)Organizational values that are shared at the system level
D)The norms, values, symbols, and traditions of the organization.